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"We are going to get every dime back that was illegally taken or taken without authorization. I was bagged by Dennis and Mark." That's Dennis and Mark as in Kozlowski and Swartz of Tyco infamy. The quote is from Peter Slusser, a Tyco director who spoke to me this week.

Slusser is a traditional, old-line investment banker who I've known since the mid-1970s when we both worked for Paine Webber. Because of Slusser's button-down Ivy League image, and his reputation for probity and integrity, I've wondered on the record how in the world he could have signed off on a $45 million severance package for Swartz, Tyco's CFO who was under grand-jury investigation at the time he received the package and was later indicted on fraud charges.

The deal, in fact, was made on the very day Swartz was forced out of the company. Tyco's compensation-committee board, of which Slusser is a member, certainly knew that Swartz was under criminal investigation by Manhattan District Attorney Robert Morgenthau when they handed him the sweet deal.

So, isn't this an example of the exact sort of corporate-board malfeasance that should be prosecuted by federal and local authorities, as well as the SEC? Slusser said no. It was the David Boise law firm, now representing Tyco, that negotiated the Swartz deal on Aug. 1 and presented it to the Tyco board on Aug. 14 as a fait accompli.

"It was the best deal they could work out," Slusser told me. "We knew full well that the company would get paid back through arbitration."

Still, I asked, shouldn't the board have adjourned this decision in light of Swartz's criminal investigation? "I had a lot of reservations about it," said Slusser. "But he was owed the money in a pro forma sense, so we went through with it. However, he'll never be able to keep it." For the record, Tyco is now suing Swartz and Kozlowski to regain stolen monies, including fraudulently earned severance packages.

Last Sept. 13, Morgenthau charged Dennis Kozlowski and Mark Swartz with stealing more than $170 million from Tyco. He accused them of running a "criminal enterprise" aimed at defrauding investors. The two were charged with numerous counts of grand larceny, enterprise corruption and falsifying business records. They were also charged with illegally obtaining more than $400 million by selling Tyco shares while concealing information from investors about executive compensation and loans. They could each face a maximum of 30 years in jail for robbing the company to buy yachts, fine art, mansions and other real-estate investments with their ill-gotten gains.

Slusser said he and other directors were furious at the covert actions of Kozlowski and Swartz, which included unauthorized bonuses, forgiven loans and grossed-up tax-related payments of mortgage-loan balances. "(Their actions) were hidden from the board and, probably, from the accountants, as well," Slusser said. "(Kozlowski and Swartz) totally ran the financial apparatus. There were no checks and balances because the board was kept in the dark."

Slusser said he is astonished at the whole turn of events at Tyco, the diversified industrial conglomerate. He related how brilliantly Kozlowski and his team seemed to be running the company. After the stock increased tenfold, Business Week called Kozlowski one of the top executives in the United States

"We admired Dennis and Mark, but that was before we discovered the skullduggery," said Slusser. "No one had an inkling that these things were going on. ... We were paying them so much king's ransom. Why did they need more? There is no rational explanation."

I asked Slusser if he could put this in the context of the current reform movement to improve corporate governance. "Well," he said, "if you are dealing with guys who are crooked, they'll stay up all night to fool you. For a short while, they'll get away with it, but eventually they'll get caught."

Caught indeed. Under current law, both Kozlowski and Swartz are likely to be put away for some time for using Tyco as their own piggy bank and then cooking the books to hide their illegal insider dealing from the board of directors and their shareholders. The same can be said for Tyco's former general counsel, Mark Belnick. From the Justice Department in Washington all the way down to the local level, we are witnessing the toughest prosecution of white-collar crime in American history.

Add to that new regulatory legislation from the federal government and the unrelenting market pressure of an 85 million strong investor class, and you have a tidal wave cleaning up the accounting fraud, corporate corruption and moral amnesia of the 1990s.

As Slusser noted, business execs who are bound and determined to break the law will do so. But today, in this newly dawning era of corporate morality, they will eventually be caught. And, let me add, punished severely.